The purpose of this section is to provide loans and loan guarantees to provide funds for the costs of the construction, improvement, and acquisition of facilities and equipment for broadband service in rural areas.

(b) Definitions

In this section:

(1) Broadband service

The term “broadband service” means any technology identified by the Secretary as having the capacity to transmit data to enable a subscriber to the service to originate and receive high-quality voice, data, graphics, and video.

(2) Incumbent service provider

The term “incumbent service provider”, with respect to an application submitted under this section, means an entity that, as of the date of submission of the application, is providing broadband service to not less than 5 percent of the households in the service territory proposed in the application.

(3) Rural area

(A) In general

The term “rural area” means any area other than—

(i)an area described in clause (i) or (ii) of section
1991(a)(13)(A) of this title; and

(ii)a city, town, or incorporated area that has a population of greater than 20,000 inhabitants.

(B) Urban area growth

The Secretary may, by regulation only, consider an area described in section
1991(a)(13)(F)(i)(I) of this title to not be a rural area for purposes of this section.

(c) Loans and loan guarantees

(1) In general

The Secretary shall make or guarantee loans to eligible entities described in subsection (d) to provide funds for the construction, improvement, or acquisition of facilities and equipment for the provision of broadband service in rural areas.

(2) Priority

In making loans or loan guarantees under paragraph (1), the Secretary shall—

(A)establish not less than 2 evaluation periods for each fiscal year to compare loan and loan guarantee applications and to prioritize loans and loan guarantees to all or part of rural communities that do not have residential broadband service that meets the minimum acceptable level of broadband service established under subsection (e);

(B)give the highest priority to applicants that offer to provide broadband service to the greatest proportion of unserved households or households that do not have residential broadband service that meets the minimum acceptable level of broadband service established under subsection (e), as—

(i)certified by the affected community, city, county, or designee; or

(ii)demonstrated on—

(I)the broadband map of the affected State if the map contains address-level data; or

(II)the National Broadband Map if address-level data is unavailable; and

(C)provide equal consideration to all qualified applicants, including applicants that have not previously received loans or loan guarantees under paragraph (1); and

(D)give priority to applicants that offer in the applications of the applicants to provide broadband service not predominantly for business service, if at least 25 percent of the customers in the proposed service territory are commercial interests.

(d) Eligibility

(1) Eligible entities

(A) In general

To be eligible to obtain a loan or loan guarantee under this section, an entity shall—

(i)demonstrate the ability to furnish, improve in order to meet the minimum acceptable level of broadband service established under subsection (e), or extend broadband service to all or part of an unserved rural area or an area below the minimum acceptable level of broadband service established under subsection (e);

(ii)submit to the Secretary a loan application at such time, in such manner, and containing such information as the Secretary may require; and

(iii)agree to complete buildout of the broadband service described in the loan application by not later than 3 years after the initial date on which proceeds from the loan made or guaranteed under this section are made available.

(B) Limitation

An eligible entity that provides telecommunications or broadband service to at least 20 percent of the households in the United States may not receive an amount of funds under this section for a fiscal year in excess of 15 percent of the funds authorized and appropriated under subsection (k) for the fiscal year.

(2) Eligible projects

(A) In general

Except as provided in subparagraphs (B) and (C), the proceeds of a loan made or guaranteed under this section may be used to carry out a project in a proposed service territory only if, as of the date on which the application for the loan or loan guarantee is submitted—

(i)not less than 15 percent of the households in the proposed service territory are unserved or have service levels below the minimum acceptable level of broadband service established under subsection (e); and

(ii)broadband service is not provided in any part of the proposed service territory by 3 or more incumbent service providers.

(B) Exception to percent requirement

Subparagraph (A)(i) shall not apply to the proposed service territory of a project if a loan or loan guarantee has been made under this section to the applicant to provide broadband service in the proposed service territory.

(C) Exception to incumbent service provider requirement

(i)In general
Except as provided in clause (ii), subparagraph (A)(ii) shall not apply to an incumbent service provider in the portion of a proposed service territory in which the provider is upgrading broadband service to meet the minimum acceptable level of broadband service established under subsection (e) for the existing territory of the incumbent service provider.

(ii)Exception
Clause (i) shall not apply if the applicant is eligible for funding under another subchapter of this chapter.

(3) Equity and market survey requirements

(A) In general

The Secretary may require an entity to provide a cost share in an amount not to exceed 10 percent of the amount of the loan or loan guarantee requested in the application of the entity, unless the Secretary determines that a higher percentage is required for financial feasibility.

(B) Market survey

(i)In general
The Secretary may require an entity that proposes to have a subscriber projection of more than 20 percent of the broadband service market in a rural area to submit to the Secretary a market survey.

(ii)Less than 20 percent
The Secretary may not require an entity that proposes to have a subscriber projection of less than 20 percent of the broadband service market in a rural area to submit to the Secretary a market survey.

(aa)the broadband map of the affected State if the map contains address-level data; or

(bb)the National Broadband Map if address-level data is unavailable.

(4) State and local governments and Indian tribes

Subject to paragraph (1), a State or local government (including any agency, subdivision, or instrumentality thereof (including consortia thereof)) and an Indian tribe shall be eligible for a loan or loan guarantee under this section to provide broadband services to a rural area.

(5) Notice requirements

The Secretary shall promptly provide a fully searchable database on the website of the Rural Utilities Service that contains, at a minimum—

(A)notice of each application for a loan or loan guarantee under this section describing the application, including—

(i)the identity of the applicant;

(ii)a description of each application, including—

(I)each area proposed to be served by the applicant; and

(II)the amount and type of support requested by each applicant;

(iii)the status of each application;

(iv)the estimated number and proportion relative to the service territory of households without terrestrial-based broadband service in those areas; and

(v)a list of the census block groups or proposed service territory, in a manner specified by the Secretary, that the applicant proposes to service;

(B)notice of each entity receiving assistance under this section, including—

(i)the name of the entity;

(ii)the type of assistance being received;

(iii)the purpose for which the entity is receiving the assistance;

(iv)each semiannual report submitted under paragraph (8)(A) (redacted to protect any proprietary information in the report); and

(C)such other information as is sufficient to allow the public to understand assistance provided under this section.

(6) Paperwork reduction

The Secretary shall take steps to reduce, to the maximum extent practicable, the cost and paperwork associated with applying for a loan or loan guarantee under this section by first-time applicants (particularly first-time applicants who are small and start-up broadband service providers), including by providing for a new application that maintains the ability of the Secretary to make an analysis of the risk associated with the loan involved.

(7) Preapplication process

The Secretary shall establish a process under which a prospective applicant may seek a determination of area eligibility prior to preparing a loan application under this section.

(8) Reporting

(A) In general

The Secretary shall require any entity receiving assistance under this section to submit a semiannual report for 3 years after completion of the project, in a format specified by the Secretary, that describes—

(i)the use by the entity of the assistance, including new equipment and capacity enhancements that support high-speed broadband access for educational institutions, health care providers, and public safety service providers (including the estimated number of end users who are currently using or forecasted to use the new or upgraded infrastructure); and

(ii)the progress towards fulfilling the objectives for which the assistance was granted, including—

(I)the number and location of residences and businesses that will receive new broadband service, existing network service improvements, and facility upgrades resulting from the Federal assistance;

(II)the speed of broadband service;

(III)the average price of broadband service in a proposed service area;

(IV)any changes in broadband service adoption rates, including new subscribers generated from demand-side projects; and

(V)any metrics the Secretary determines to be appropriate;

(B) Additional reporting

The Secretary may require any additional reporting and information by any recipient of any assistance under this section so as to ensure compliance with this section.

(9) Default and deobligation

In addition to other authority under applicable law, the Secretary shall establish written procedures for all broadband programs administered by the Rural Utilities Service under this or any other Act that, to the maximum extent practicable—

(A)recover funds from loan defaults;

(B)deobligate any awards, less allowable costs that demonstrate an insufficient level of performance (including metrics determined by the Secretary) or fraudulent spending, to the extent funds with respect to the award are available in the account relating to the program established by this section;

(C)award those funds, on a competitive basis, to new or existing applicants consistent with this section; and

(D)minimize overlap among the programs.

(10) Service area assessment

The Secretary shall, with respect to an application for assistance under this section—

(A)provide not less than 15 days for broadband service providers to voluntarily submit information concerning the broadband services that the providers offer in the census block groups or tracts described in paragraph (5)(A)(v) so that the Secretary may assess whether the applications submitted meet the eligibility requirements under this section; and

(B)if no broadband service provider submits information under subparagraph (A), consider the number of providers in the census block group or tract to be established by using—

(i)the most current National Broadband Map of the National Telecommunications and Information Administration; or

(ii)any other data regarding the availability of broadband service that the Secretary may collect or obtain through reasonable efforts.

(e) Broadband service

(1) In general

Subject to paragraph (2), for purposes of this section, the minimum acceptable level of broadband service for a rural area shall be at least—

(A)a 4-Mbps downstream transmission capacity; and

(B)a 1-Mbps upstream transmission capacity.

(2) Adjustments

(A) In general

At least once every 2 years, the Secretary shall review, and may adjust through notice published in the Federal Register, the minimum acceptable level of broadband service established under paragraph (1) to ensure that high quality, cost-effective broadband service is provided to rural areas over time.

(B) Considerations

In making an adjustment to the minimum acceptable level of broadband service under subparagraph (A), the Secretary may consider establishing different transmission rates for fixed broadband service and mobile broadband service.

(3) Prohibition

The Secretary shall not establish requirements for bandwidth or speed that have the effect of precluding the use of evolving technologies appropriate for rural areas.

(f) Technological neutrality

For purposes of determining whether to make a loan or loan guarantee for a project under this section, the Secretary shall use criteria that are technologically neutral.

(g) Terms and conditions for loans and loan guarantees

(1) In general

Notwithstanding any other provision of law, a loan or loan guarantee under this section shall—

(A)bear interest at an annual rate of, as determined by the Secretary—

(i)in the case of a direct loan, a rate equivalent to—

(I)the cost of borrowing to the Department of the Treasury for obligations of comparable maturity; or

(II)4 percent; and

(ii)in the case of a guaranteed loan, the current applicable market rate for a loan of comparable maturity; and

(B)have a term of such length, not exceeding 35 years, as the borrower may request, if the Secretary determines that the loan is adequately secured.

(2) Terms

In determining the term and conditions of a loan or loan guarantee, the Secretary may—

(A)consider whether the recipient is or would be serving an area that is unserved or has service levels below the minimum acceptable level of broadband service established under subsection (e); and

(B)if the Secretary makes a determination in the affirmative under subparagraph (A), establish a limited initial deferral period or comparable terms necessary to achieve the financial feasibility and long-term sustainability of the project.

(3) Recurring revenue

The Secretary shall consider the existing recurring revenues of the entity at the time of application in determining an adequate level of credit support.

(h) Adequacy of security

(1) In general

The Secretary shall ensure that the type and amount of, and method of security used to secure, any loan or loan guarantee under this section is commensurate to the risk involved with the loan or loan guarantee, particularly in any case in which the loan or loan guarantee is issued to a financially strong and stable entity, as determined by the Secretary.

(2) Determination of amount and method of security

In determining the amount of, and method of security used to secure, a loan or loan guarantee under this section, the Secretary shall consider reducing the security in a rural area that does not have broadband service.

(i) Use of loan proceeds to refinance loans for deployment of broadband service

Notwithstanding any other provision of this chapter, the proceeds of any loan made or guaranteed by the Secretary under this chapter may be used by the recipient of the loan for the purpose of refinancing an outstanding obligation of the recipient on another telecommunications loan made under this chapter if the use of the proceeds for that purpose will support the construction, improvement, or acquisition of facilities and equipment for the provision of broadband service in rural areas.

(j) Reports

Not later than 1 year after the date of enactment of the Food, Conservation, and Energy Act of 2008, and annually thereafter, the Administrator shall submit to Congress a report that describes the extent of participation in the loan and loan guarantee program under this section for the preceding fiscal year, including a description of—

(1)the number of loans applied for and provided under this section, including any loan terms or conditions for which the Secretary provided additional assistance to unserved areas;

(2)

(A)the communities proposed to be served in each loan application submitted for the fiscal year; and

(B)the communities served by projects funded by loans and loan guarantees provided under this section;

(3)the period of time required to approve each loan application under this section;

(4)any outreach activities carried out by the Secretary to encourage entities in rural areas without broadband service to submit applications under this section;

(5)the method by which the Secretary determines that a service enables a subscriber to originate and receive high-quality voice, data, graphics, and video for purposes of subsection (b)(1);

(6)each broadband service, including the type and speed of broadband service, for which assistance was sought, and each broadband service for which assistance was provided, under this section; and

(7)the overall progress towards fulfilling the goal of improving the quality of rural life by expanding rural broadband access, as demonstrated by metrics, including—

(A)the number of residences and businesses receiving new broadband services;

(C)average broadband speeds and prices on a local and statewide basis;

(D)any changes in broadband adoption rates; and

(E)any specific activities that increased high speed broadband access for educational institutions, health care providers, and public safety service providers.

(k) Funding

(1) Authorization of appropriations

There is authorized to be appropriated to the Secretary to carry out this section $25,000,000 for each of fiscal years 2008 through 2018, to remain available until expended.

(2) Allocation of funds

(A) In general

From amounts made available for each fiscal year under this subsection, the Secretary shall—

(i)establish a national reserve for loans and loan guarantees to eligible entities in States under this section; and

(ii)allocate amounts in the reserve to each State for each fiscal year for loans and loan guarantees to eligible entities in the State.

(B) Amount

The amount of an allocation made to a State for a fiscal year under subparagraph (A) shall bear the same ratio to the amount of allocations made for all States for the fiscal year as—

(i)the number of communities with a population of 2,500 inhabitants or less in the State; bears to

(ii)the number of communities with a population of 2,500 inhabitants or less in all States.

(C) Unobligated amounts

Any amounts in the reserve established for a State for a fiscal year under subparagraph (B) that are not obligated by April 1 of the fiscal year shall be available to the Secretary to make loans and loan guarantees under this section to eligible entities in any State, as determined by the Secretary.

(l) Termination of authority

No loan or loan guarantee may be made under this section after September 30, 2018.

The date of enactment of the Food, Conservation, and Energy Act of 2008, referred to in subsec. (j), is the date of enactment of Pub. L. 110–246, which was approved June 18, 2008.

Codification

The authorities provided by each provision of, and each amendment made by, Pub. L. 110–246, as in effect on Sept. 30, 2012, to continue, and the Secretary of Agriculture to carry out the authorities, until the later of Sept. 30, 2013, or the date specified in the provision of, or amendment made by, Pub. L. 110–246, see section 701(a) ofPub. L. 112–240, set out in a 1-Year Extension of Agricultural Programs note under section
8701 of this title.

2014—Subsec. (c)(2). Pub. L. 113–79, § 6104(a)(1), added par. (2) and struck out former par. (2). Prior to amendment, text read as follows: “In making or guaranteeing loans under paragraph (1), the Secretary shall give the highest priority to applicants that offer to provide broadband service to the greatest proportion of households that, prior to the provision of the broadband service, had no incumbent service provider.”

Subsec. (d)(1)(A)(i). Pub. L. 113–79, § 6104(a)(2)(A), added cl. (i) and struck out former cl. (i). Prior to amendment, text read as follows: “demonstrate the ability to furnish, improve, or extend a broadband service to a rural area;”.

Subsec. (d)(2)(A)(i). Pub. L. 113–79, § 6104(a)(2)(B)(i), added cl. (i) and struck out former cl. (i). Prior to amendment, text read as follows: “not less than 25 percent of the households in the proposed service territory is offered broadband service by not more than 1 incumbent service provider; and”.

Subsec. (d)(2)(C)(i). Pub. L. 113–79, § 6104(a)(2)(B)(iii)(II), added cl. (i) and struck out former cl.(i). Prior to amendment, text read as follows: “Except as provided in clause (ii), subparagraph (A)(ii) shall not apply to an incumbent service provider that is upgrading broadband service to the existing territory of the incumbent service provider.”

Subsec. (e). Pub. L. 113–79, § 6104(a)(3), added pars. (1) and (2), redesignated former par. (2) as (3), and struck out former par. (1) which read as follows: “The Secretary shall, from time to time as advances in technology warrant, review and recommend modifications of rate-of-data transmission criteria for purposes of the identification of broadband service technologies under subsection (b)(1).”

Subsec. (g)(2). Pub. L. 113–79, § 6104(a)(4), added par. (2) and struck out former par. (2). Prior to amendment, text read as follows: “In determining the term of a loan or loan guarantee, the Secretary shall consider whether the recipient is or would be serving an area that is not receiving broadband services.”

Subsec. (j)(1). Pub. L. 113–79, § 6104(a)(5)(A), inserted “, including any loan terms or conditions for which the Secretary provided additional assistance to unserved areas” before semicolon at end.

2008—Pub. L. 110–246, § 6110(a), amended section generally, substituting provisions authorizing loans and loan guarantees for the costs of construction, improvement, and acquisition of facilities and equipment for broadband service in rural areas and terminating such authority on Sept. 30, 2012, for provisions authorizing similar loans and loan guarantees and terminating such authority on Sept. 30, 2007.

“(1) In general.—Not later than 180 days after the date of enactment of this Act [May 13, 2002], the Secretary of Agriculture shall promulgate such regulations as are necessary to implement the amendment made by subsection (a) [enacting this section].

“(2) Procedure.—The promulgation of the regulations shall be made without regard to—

“(A) the notice and comment provisions of section
553 of title
5, United States Code;

“(B) the Statement of Policy of the Secretary of Agriculture effective July 24, 1971 (36 Fed. Reg. 13804), relating to notices of proposed rulemaking and public participation in rulemaking; and

“(C) chapter
35 of title
44, United States Code (commonly known as the ‘Paperwork Reduction Act’).

“(3) Congressional review of agency rulemaking.—In carrying out this subsection, the Secretary shall use the authority provided under section
808 of title
5, United States Code.”

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